High feature phone share in Africa and Asia & Oceania protects SMS OTP revenue while creating number verification network API opportunities. Telcos should establish market leadership before smartphone growth enables competing solutions.
Omdia view
Summary
Feature phone prevalence across Africa and Asia & Oceania (excluding China) creates both a defensive advantage for A2P SMS revenue coming from SMS OTP and an offensive opportunity for network API-based verification solutions. Telcos should take advantage of this opportunity to establish a strong position in the evolving authentication landscape in these markets.
SMS OTP will be pushed out by alternative superior solutions
SMS one-time password/pin (OTP) is a method of multi-factor authentication (MFA) in which an OTP or pin is sent via SMS to a user. The user then inputs the OTP into their device to verify ownership of their phone number. However, SMS OTP has significant limitations:
- Lack of encryption
- Susceptible to phishing
- Reliant on mobile network
- Requires significant user input
- Relatively slow.
As a result, SMS OTP revenue is under threat globally from competing verification solutions, such as over-the-top (OTT) OTP, app-based authentication, biometric passkeys, and emerging network APIs. Table 1 illustrates the benefits of alternative verification solutions to SMS OTP.
Table 1: A comparison of verification solutions
Verification method | How it works | Examples | Advantages | Disadvantages |
SMS OTP | The user receives an OTP via SMS, which they input into the device to verify ownership | ‒ | Very broad coverage No setup required Simple and familiar for most users
| Vulnerable to phishing, SIM swapping, and SMS interception. Not end-to-end encrypted. SMS delivery can fail due to network issues. |
OTT OTP | The user receives an OTP via OTT messaging apps or services instead of SMS | WhatsApp, Signal, Telegram | Can be end-to-end encrypted Doesn’t require cellular network | Requires internet access. Vulnerable to phishing. Less universal, requires app-enabled phones. |
App-based | A user links their account to an authentication app. The app generates time-sensitive codes directly on their smartphone. The user inputs the code to verify identity when logging into a service | Google authenticator, Authy, Microsoft authenticator | Cost – free Security – not vulnerable to SMS interception or SIM swapping Reliability – do not depend on network availability User experience – no need to wait for an SMS | Requires a smartphone. Requires many user inputs. |
Biometric passkeys | Combine biometric authentication (such as fingerprints, facial recognition, or voice) with passkeys, which are cryptographic key pairs. The biometric data is used to unlock the private key stored securely on the user’s device. This private key is then used to authenticate the user without needing a password | Apple Passkey, Google passkey, Windows Hello | Cost – free Security – not vulnerable to SMS interception or SIM swapping Reliability – do not depend on network availability User experience – no need to wait for an SMS | Requires modern devices (smartphones) and infrastructure. |
Network APIs | “This API provides a mechanism to automatically verify whether a user is interacting via a device that has a SIM card associated with a certain phone number (MSISDN)” ‒ Telefónica Open Gateway | Telefónica open gateway number verification API (see also Network API introduction from Orange and Number Verify: secure next-generation authentication from Vodafone ‒see Further reading) | Security ‒ not vulnerable to SMS interception or phishing User experience – faster, no user input required Lower abandonment rate – increased customer acquisition | Cost – generally priced similarly to, or above, SMS OTP. Limited coverage currently. Still susceptible to SIM swapping. |
Source: Omdia
OTT OTP, app-based authentication, and biometric passkey solutions compete with SMS OTP by addressing its core weaknesses: they are more secure, do not rely on mobile network coverage, provide faster authentication, are cheaper, and offer superior user experiences. However, OTP SMS still holds the key advantage of functioning without an app or smartphone.
Feature phones maintain SMS OTP relevance, but market share is declining
In 2025, feature phones comprised 45% of Africa’s phone market and 34% in Asia & Oceania (excluding China) compared to just 22% globally, as shown in Figure 1. Individual countries show even higher concentrations, such as 62% in Laos and 51% in Nigeria.
Figure 1: Feature phone market share, 2022‒29
Source: Omdia
High feature phone ownership limits competing solutions to OTP SMS. For example, biometrics and app-based authentication remain unavailable to users without smartphones, protecting A2P SMS OTP revenue from immediate competitive threat. However, feature phone market share is on a downward trend.
This is where network-API-based verification comes in. The number verification API confirms ownership of a phone number without requiring an SMS. Instead, when the API is called, a check is carried out directly with the mobile operator allowing a device to be verified without any user input. Omdia forecasts that the number verification API will generate $3.7bn globally by 2030 (see Omdia’s Telco Network API Revenue Forecast 2025 (2023–30) in Further reading).
Its advantages over SMS OTP are compelling:
- Enhanced security: Unlike SMS OTP, the number verification API eliminates the need for PINs or passwords, reducing vulnerability to phishing attacks.
- Faster verification: The API enables near-instant validation of phone numbers, ensuring quicker and more efficient authentication processes.
- Minimal user input: Users are not required to manually enter codes, simplifying the verification process and reducing errors.
- Improved user experience: The streamlined process minimizes friction during sign-up, leading to lower abandonment rates and enhanced customer acquisition. This may provide revenue uplift beyond SMS OTP.
Importantly, the number verification API is network based, allowing it to function on feature phones without requiring mobile data or Wi-Fi. In some implementations, it can even operate without a mobile network by using Wi-Fi instead. Network API pilots have already demonstrated enhancements to feature phone capabilities; for example, China Telecom’s TeleNavi Seniors service enables ride-hailing through voice commands by using location APIs for positioning without GPS.
A feature phone user may need number verification for various functions such as USSD banking, which is used widely across Africa, utility payments, e-commerce, or verification of a phone number when signing up to a service with another device type, such as on a PC. In South Africa, MTN, Telkom, and Cell C have launched number verification APIs, and MTN’s deployment is GSMA Open Gateway Certified (see Further reading). However, the capabilities of the number verification API and other network APIs are entirely dependent on operators in each country enabling these APIs within their networks. Without approximately 70‒80% population coverage in each market, network API solutions lack sufficient reach to be attractive to developers.
By proactively deploying API-based verification solutions, telcos in Africa and Asia & Oceania can secure a larger share of the verification market before competing methods gain traction with rising smartphone adoption. This positions operators as key players in the evolving verification landscape, while enabling the migration of A2P SMS OTP revenue to higher-value, telco-controlled network API revenue and protecting against external competition.
Appendix
Further reading
Telco Network API Revenue Forecast 2025 (2023–30) (April 2025)
Telco Network API Revenue Forecast Analysis 2025 (July 2025)
Omdia smartphone/feature phone installed base forecasts (September 2025)
GSMA, South Africa launches and certifications - Open Gateway (retrieved November 21, 2025)
Orange, Network API Introduction (retrieved November 20, 2025)
Telefónica, “Number Verification API | Telefónica Open Gateway” (retrieved November 18, 2025)
Vodafone, “Number Verify: secure next-generation authentication” (retrieved November 20, 2025)
Author
Adam Mackenzie, Senior Analyst, Service Provider Strategies and Network Economics
